Pure Storage (PSTG)

Matt Danziger Vice President of Investor Relations
Charlie Giancarlo Chief Executive Officer
Tim Riitters Chief Financial Officer
David Hatfield President
Matt Kixmoeller Vice President of Product
Aaron Rakers Wells Fargo
Mark Murphy J.P. Morgan
Wamsi Mohan Bank of America Merrill Lynch
Sherri Scribner Deutsche Bank
Katy Huberty Morgan Stanley
Alex Kurtz KeyBanc Capital Markets
Andrew Nowinski Piper Jaffray
Ittai Kidron Oppenheimer
Jason Ader William Blair
Erik Suppiger JMP Securities
Victor Chiu Raymond James
Mehdi Hosseini SIG
Rod Hall Goldman Sachs
Eric Martinuzzi Lake Street
Stephen Fox Cross Research
Call transcript
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Good afternoon. My name is Mike and I will be your conference operator today. At this time, I would like to welcome everyone to the Pure Storage Second Quarter Fiscal 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session [Operator Instructions]. the Relations. to turn President Danziger, now Investor of will call Matt over Vice I

begin conference. may You your

Matt Danziger

Thank you, and Storage QX good afternoon. Welcome XXXX Conference to Earnings Call. Fiscal the Pure

CFO, and our of are Charlie our Joining Kixmoeller. VP our me Hatfield; Giancarlo; Product, today our David President, Tim CEO, Matt Riitters;

no technology Before competitive, uncertainties. model, statements future prospects for our and and statements based that subject which and business operations, trends, obligation this we to products, like industry These management Any undertake as opportunity, call periods. various revenue including you that guidance I to remind our margin would and include update assumptions operating are make are today regarding statements on will growth and them. begin, and risks and current positioning we forward-looking to and of during make strategy, future we forward-looking our

results not filings of to Our A to filings. from SEC may public reported and uncertainties our is the materially our indication refer we and an the and these as relating business should actual contained differ future of considered risks in predicted results with discussion results you performance. be

CEO, Pure for Web that, discuss broadcast performance playback and at live on Giancarlo. in turn days being Storage. provided An least on the most being recorded archived for of the non-GAAP to we about Storage call webcast over I'll the the earnings talking and press site Relations site Company’s our be property With is our in the During call, of comparable GAAP this Web This Charlie slides. is and purposes. is archive call will the IR the to will are XX reconciliations measures directly measures release Investor and Pure

Charlie Giancarlo

Thanks go-to-market and updated will with exceptional and will everyone. provide outlook. QX finally, Pure. us our for give a a I an begin call. will summary of Good today’s joining update our a then results was highlights. our the Thank you, Hat and call detailed on review earnings afternoon of for Matt. QX quarter Tim financials

and guided Our in a QX $XXX technology was Gross upper quarter margins We XX% the three the advantage our the strength XX%, for seasonal up particularly were of and All very X.X%. our QX, executed performance our exceeded X.X% with year profitability well. the was reflecting saw business the leverage and margins strong were period model. achieved great compared our team business strong inherent sequentially in and and same measures the momentum in the ranges. million, up operating at positive of end ago. Revenue

and remainder us We customers data margin storage to market. the has strengthen on the for later. our we gross Tim Pure’s technology as in detail repeatedly continued expect are of focus will as the share and continue raising more in to year positioned leader outlook innovation the

innovation axis. For the consecutive year, positioned in the highest execution Pure their right Quadrant. as fifth was in and on a and the And most farthest Pure recognized the Magic recent report, to Gartner both has leader

vision. flash mainstream, of delivered Accelerate the number In enterprises has scale-out data above to software, our QX, accelerated and use at applications us with The on old led competitors compute highlighted networks, for that on architecture, focus storage centric Conference shared build to the modern of democratize display converged of centric styled of all Pure, direct-attach on optimization enabled for replacing and At democratizing by Our NVMe a data an sizes all journey we architectures customers’ our storage designs. cases. next in continue to storage. we strategy generation This bringing we increasing SaaS as was event, other the flash to mainstream positioned May.

is announced to FlashArray//X, of NVMe across NVMe their And largest Accelerate we that year, family, we impressive highest only X speed our entire QX, all-flash NVMe. the May, to their and will of array. expect democratization be revenue NVMe and vast of the was in X launched year short, end of a FlashBlade product majority also strong continue quarter you of to NVMe the by of shipments last in our a working. as than the which this It expansion In the for as more the enables As FlashBlade are restore, offerings expanding time. saw number At major AI In all the with first as full line. for their new The we our our were our all NVMe. customers recall purchases priced in acquiring competitors first of cases our well has material use products. market just and of bring contrast, products been rapid beginning adoption we XX% family such as customers

During the our quarter, we deployments saw momentum very of promising AI AIRI. with

XXX% partners cloud first, Pure’s a for software portfolio services and capability. plans large-scale also to public contribution that focus and on-premise StorReduce, the and customers increasing is and that as to M&A leadership. we integration spoke current StorReduce architectures both completed call you a and to object three the forward most ago, was competition, the rise, family. to outlined With continue portfolio a look continues cloud year I operational its to welcome managing first business will everywhere. both for we We with gross team engine designed With including product to increasing excited which integration recently optimized and and achieve about natural unique StorReduce excellence a priorities, and data. also the NPS and healthy, lead turn I'll is StorReduce’s and and technology innovation our milestones storage, importantly Hat. model product our customers, the to transaction operating margins, industry-leading company. When We acquisition on native Pure cloud score to Pure’s that, continues of StorReduce an profitable a we de-duplication unstructured to are our be enables cloud the hybrid cloud over

David Hatfield

Thanks, a and innovation, on Charlie. differentiated deliver build. as underpinned strategy our relentless has a model focus quarter stellar Pure’s to for consistent results. QX unparalleled customer our momentum operating business was technology indeed Pure to success, continues a

our a evergreen cycle with capabilities business innovation in This innovation, and FlashBlade, take together business unique with model no when customers across architecture of advantage compared the platforms. AIRI fantastic we FlashArray, with enables PureX our are to disruption of any FlashStack, and these We our earlier competitors. and that pioneered,

one innovation the OLTP, database use and recognized and virtualization, Being Quadrant, differentiated validated Gartner's and are critical NDI only the execution the global market. scored all proud guidance in in in this cases in segment number recognition companies Pure vendors revenue report. also fifth consecutive partner Thousands not we for Magic Our to of of the but three Gartner's the largest capability to best-in-class of AFA highest is in as enterprises with, for of year. turn identifying

are scores companies We XX.X, pleased as that to decline of see last year from top year the to retaining our in to XX.X all has noted the it’s also net in Pure fourth over promoter spot share Critics a promoter score companies. row, scale increase up time. net common have that certified an BXB X%

our with relentless rewarding to wisdom. it’s this us customer-first to However, conventional defy focus

we more capabilities these and has Accelerate competitors partner market strategy quick showing our business go-to-market program is The that at well when quarter to Conference see unveiled results, new our especially working, to particularly national partners. is direct. we last unique take been centric our channel taking Our largest within received largest

cycle. sequentially X,XXX current the parallel from more Our unique with product ASA it partners are able And differentiation at Win fully and FlashArray//X this should are adoption than performed pleased our quantify and industry-leading our and We across added think all-NVMe our for to well focus XXXX cost effectively win customers we consistently FlashArray of find simply, year-over-year, line sales across new largely along Board. and deliver in and new Pure Quite teams rates benefiting our without extremely sales can in product with the the core, value. a by teams only anyone architecture to gross of active mix the in its we strong don't increased showcases margins, driven our our quarter are market. the that cluster. and NVMe nearly rates XXX very the markets. remain total

offering. had strong with also very a quarter FlashBlade our We

Our infrastructure solution, to ready our use enjoy it together continues AIRI delivered case well. launch QX rapid strong Nvidia, in AI restore of momentum QX as strong expanded and Mini within the and retraction AIRI with

easily proposition then that of AI and Importantly, solutions value that match. just a Mini the can’t expand deployments we’re finding is to AIRI kick-start simplicity competitive

services with market all government, early-stage AI technology, innings, be industries While balance proving is startups customers customers media, of still We many cuts decade in AI finance, that old and geographies. a across healthcare, leaders. automotive AI technology early to social in have multiple now the in from a to

a data dollar services Our QX. consolidation with segments We resonating message is QX, architecture number and financial with well history. and the healthcare centric pleased our of in were as in all progress our highest million wins the into selling particularly cloud, across in industries

progress Cancer organizations, of the of into and overall had segment, business accelerated FlashBlade. quarter, of saw some Bank and Our cloud the across and Royal storage FlashArray financial in next In segment MD our and Canada. shared the and Anderson business York the both win generation including highest enterprise represent Across platform, continued Desjardin Center, Center, to applications the of analytics rates Genome New Group services the Texas, customers, repeat continues approximately we we customers. XX% University our enjoys across a including our consolidating wins healthcare leading purchase and

acquisition enables already strong our providers, are We strategy noted, protection. key fantastic. come. the for integration thrilled The technology more partnerships on-prem the cloud and tiering, data overall and and multiple Finally, in including our to plans with is and of StorReduce cases, momentum as our business has cloud public migration forward multi-cloud we use in Charlie StorReduce. sharing about months cloud StorReduce forged their look on to

great a innovation cycle. We’re in

the We’re investing getting And call It over half now Puretans like the feels enthusiastic that, in ahead. just are the second the we’re and Tim. and years With turn I’ll truly cloud. fellow to about started. customers

Tim Riitters

margin. a on measures; for guidance Thanks, three Hat. and of all as operating great our was we Pure guided ranges QX gross quarter revenue, margin exceeded our

in strong use of of my growing These presentation year-over-year. we points across numbers results available and benefits non-GAAP well product X.X growth XX% points A QX Before differentiation associated illustrate cost competitors’ Support component of continued otherwise driven subscription on margin quarter. products, into margin, savings and I FlashArray//X increase centric margins up United or at increased site of free a will and these we relations by margin, Product subscription GAAP represents from increased Geographically, by our gross metrics revenues Product launch strength are reconciliation our continued XX.X%, QX quarter and highest as fundamentals early investor the for Revenue make by the our revenue amortization gross XX%, were performance was business from X.X XX% revenues unless Total States comparables, note Web as the X.X came Support our the retrofit growth to were the that of with XX% our our ongoing noted. line. growth XX.X%, investor.purestorage.com. usual have the seen the I'll of OpEx, products flow support margin and our go-to-market the our million in our million of adopter validate I million driven of guided execution income range. gross organizations from cash our teams. value timing net results of as full result non-GAAP margin end year-over-year. to or gross and to their specifics, operating base, customers are during software revenues significant and XX% subscription dive of or and contracts $XXX.X our between This install margin solid support to Total previous history. year-over-year in driven the points markets. the upper exceeded was gross continued quarter. certain $XX.X performance by deliver in solid was XX% execution renewal came $XXX.X international the and bookings the a Company's all architectures.

XXX QX and year period with the X XX to positive above guidance. our our was driven Turning profitability growth ranges. representing X.X%, the ago over improvement margins over million an We quarter operating of same at The Net a quarter margin. in was of $X.XX of delivered quarter point a of million average margin per outstanding share and This a share revenue of a million the shares. or year. represents on positive of or based another $X.XX improvement compares the negative point strong share net a negative operating guided quarter. based of weighted $X.X Total average weighted midpoint XXX positive the in a gross by outperformance in QX income XXX of the more X,XXX end the than per the employees, which on during loss shares shares period count QX to $XX.X headcount million last at employees increase was approximately an

the to cash from million flows. $XX.X and We employee flow billion, $X QX up during This our million ago the million year negative $XX.X cash Turning plan. free which compares stock slightly investments was purchase our stock Free cash with balance including ended from plan. last quarter. purchase flows $X from sheet employee quarter, included quarter, to $X.X our of the negative cash which and million in was of

be of to now reminder our flow generation QX our fiscal to With point cash lowest turn throughout guidance. a that, year. tends we’ll As the

quarter, third $XXX our range midpoint. expect the of million we million, between in at million $XXX For and the revenues $XXX or

margins We range be gross XX.X% XX.X% and expect at to the or midpoint. in of XX% between the

We or X% midpoint. X% positive positive range the margins positive in operating of expect X% and between the at

we midpoint. between of in previously represent the $X.XXX billion million and $X.XX guided our range For of the increase year, midpoint $X.XX $XX billion, expect from full an revenues billion, of a which

raising are the XX.X% margin between XX.X%, We midpoint. gross range to or and at XX.X% our

on of of strong for also half momentum raising X.X%, in strategy full call is the at or guidance statement a are between the margin excitement second is We the we The midpoint. the With our have questions. year. X.X% validation our and an year a that, indication we’ll working the for operating open seeing raising business, are we of Operator? the to X.X% from now range our our


Aaron Rakers [Operator from Wells Fargo. question comes Instructions] Your first from

Aaron Rakers

confidence bit if what dynamic, any some drivers forward-looking as could pricing pass guess not your you it deeper that if a How a just the driver that gross or you're gross is I you're and like or And through feel NAND whether on abstract have the see wondering to the you much in seeing do will start these dig from was into you little continue. flash we sounds of dynamics basis, to would just and I a end-users? here margin I'm margin. curious given whether you pricing like decline particular, to able NAND to not in that of or

Charlie Giancarlo

things. benefit I down going we three would break see we the gross what different margin that had this quarter on and forward

The for start that else we’re we’ve a year in it premium bring is definitely the we to on to we’d value also we’re this value than series get take coming of we -- X for that gets is pretty the because the saw. that's so -- our prices we actually first now two, going benefit we’ve third start We thought decreasing able what sell effect predicting They out in last for We pretty able flash, is, mentioned we I we’d exactly frankly, then us and awareness our we’re to value or base. as past, the of prices to evergreen as able And NAND just been quarter NAND and our having next anyone feel saw the that believe that the increasing that. be and and of -- NAND And starting know quarter now, what cost that that Two get intended out with more about industry. decrease our series did beginnings program we and bring understand able clearly to products good. the to a or yes, NAND customer and the benefit. lower to to the almost of prices and we we performance starting is a good quarter are those for us of advantage the feel past the we gives customer that’s quarter expanding. this X be faster enhanced think see

Aaron Rakers

revenue growth good you grew as seems NetApp look your AI, be when we quick within overall as general storage versus at grew do think peer about terms follow-up How product business, you in rapid as you just XX%. what I your am and contribution market think And in market, workloads, XX% a far closest to generation a traditional guys backdrop. if demand next curious you enterprise just the as year-over-year the all-flash storage will, pretty the you're restore the seeing about stream? what from and

Charlie Giancarlo

the that at flat grew entire we Well, when we best year-over-year of storage rest let that, for just XX% out at And digits. and our we’re single were high competing the take look me market. competitors

magnetic identify what So flash let base you the no in new there with that some seeing. as There same putting being we’re replacing some mistake. can't compare be and rate growth install disks as

as growing add company. that? some color We’re you to XX% want on do Hat, a

David Hatfield

is we’re the XXX were only on And thrilled they customers margin because their about that really The nearly two day. base. would win that, six headline I per The net I gross are folks customer converting add in rates new other areas with our acquisition, thing the new are I net think stopped think relying have here. install that’s talking

and NetApp expanding we’re Our else grew margin. win grew rates everybody quarter-on-quarter and and against sequentially while year-on-year,

much on So we pretty think that. that

Charlie Giancarlo

that. thing the add if that’ll mention And can I here is last in

elasticity real. As decline see is with do over pricing NAND time, we

use tier and more opportunity will expansion that’s getting more traditionally and of for market us. We be what cases, our X


question from Morgan. J.P. Murphy Mark next from comes Your

Mark Murphy

to increase are where What ask a you than on is ago. and were quarter off growth year a my confidence add growth rates higher revenue XX% whether much, they in very you multiyear coming the results. Thank I your congrats healthy will

your net as You even scores promoter mentioned higher well. rose

does factors growth So technology increase achieve and to markets? are confidence do very is in rare the at you that think what the sustainable which scale, essential

Charlie Giancarlo

confident of the out growth very We’re rates we that before. set

whole for say track much but run billion that you love a a rate of $X year. that confidence on the is performance, on fiscal not I basis but customers. next NPS couple pipeline good any more from identified that much would quarter's the hopefully, And over that we that of X time products and the series that And We’re door, in from out one stems about just be we that so a year. the hitting we’ll just importantly, feel years us. engine have behind of released our coming next talking our scores have we new as we the capabilities innovation about pipeline we have very

Mark Murphy

follow-up cloud make in a the on or initial a update believe think with you're traction Could company year? that had the your the this purchase. a of you cloud providers? what maybe As adoption, And us types second bring and the having mix maybe SaaS I going you discussions SaaS and to on cloud recently you seven-figure of the half here

David Hatfield

the repeat providers a the highest So area continues for multimillion in focus cloud mentioned, rates purchase strong our initially, X,XXX business the to the teams cloud dollar wins selling be close be key as a us, really cloud top overall. I that rates; candidly so for to and and highest continues of

So keep investing we'll there.

well. in with the I think by beginning million number are that And reflected dollars We as highest the wins the year. up pleased quarter having had emphasis the this that's at market we in

driver businesses key our but enterprise growth we commercial is great traction saw across us business cloud for So front. a and


Your from America Bank question Mohan of comes from Merrill Wamsi Lynch. next

Wamsi Mohan

you revenue different there quarter the Are best margin of talk has others. consolidation SKU at table product on look at with gross been and margins? you you in landscape, competitive strategies some lot about delivered history. guys the leaving If growth channel by these your the But EMCs introduction significant of

Charlie Giancarlo

standpoint, We growth Thank don't on company. message. you I -- a certainly so, for we the think say as focused from a would we’re

not we this money said But premium our price as I’ve price we not on table we’re take lose the on Now certainly certainly we’re don't the get but to past, we leave going and can in win to either. going it.

we that win So for deal. best the are for, every that our product to is we’re solution going -- that opportunity

David Hatfield

best Wamsi, I’ll almost I’ve segment the no doubt product sales just is have XX think doing But is for there been team. benefiting the we this years sales team I add, and this by in this cycle far.

our go-to-market that really channel dividends. think is centric I with in conjunction paying

partners, growing back the with a think we’re and taking larger international I growing competitors drop are partners direct. deals that's where more we’re the

nice So in competitive sales to I just and operate capabilities differentiate. with really landscape think we have team great breaking really to a

Wamsi Mohan

NAND talk overall rates? you significant. elasticity demand The how NAND declines or declines. about potentially of And been industry do opportunity that we I in industry guys have as terms think fairly for the quick XX to price that of can point What elasticity as or follow-up, you growth mean a demand? think do mentioned you does price sizing faster growth about

David Hatfield

question difficult that We we -- controlled players pricing to formula declines of know by a answer. into frankly is large course hard it’s market That’s that AFA us. than complex But elasticity that’s what but exactly translating project a declines. more to real, see largely is NAND

so But incoming, that as more to the be NAND longer as -- is not we the do. past, low able predict. we market And we difficult AFA as to bit of we advantage they come be And little therefore difficult quickly mentioned sure will of will so take may know what magnetic replacement. NAND up think a for prices for declines do in to as it’s

Tim Riitters

we’ve down, up is out company. itself NAND going confident we we’ve has NAND of That feel in elasticity been something that a going all lot so in. a scenarios elasticity these since And trend that it’s tracked that a very proven of


Sherri Deutsche Scribner from Bank. comes from Your next question

Sherri Scribner

the have of pricing. guidance, you range. margins And quarters down NAND not some what and target. You move your margins margins the better of term changes year been term, couple the longer your business helped we move guess past long the the at still on this some ’XX as but are to to bit but had takes prices suggests a look And gross extent over end are some it of into the strong with just the NAND come through, it’s higher you if I be the of by margins may stabilizing? what and puts very risks guys the in doing in as

Charlie Giancarlo

frankly, front and of pass Tim thing that I that on the new X I it series other and advantage. is the the that of our improvement therefore to value that think value and first we in maintain pricing the is premium end have our then greater ability been the very take is -- product we But is NAND I’ll of probably is the to the it, greater a recognition margins. part of the side evergreen with that the which our me Let for think more important that bring

larger the we overall bring, I let I’ll but bring the contribution certainly and is NAND for that that. the advantage with model, our premium the And Tim the the in software probably pricing to it, capabilities say, that So that able take that software would to we solution, helps. we’re get

Tim Riitters

Yes, I would those just dimensions. echo Charlie all of on

NAND. think that really allowed whatever on on whatever this you’ve us. to and declining times the been its We’ve seen us for increasing maybe you’ve core, out time innovation. for that advantageous And we were about of about long in designed talking of which focus flash times flash seen has NAND, a maybe software in I I’d optimize software at there how

we to we the margin that the of why product are industry continue. reason expect a and and top gross at there's So

Sherri Scribner

that, following just on think got up target. I I your you guess long-term

the that, of potentially be providing, And at high product don’t you all mix, away. that big seem the going clearly and that. to those You’re the are be seem guys drivers end to of value

long maybe term really they low long the it’s So about how conservative the at end probably about at Are being should we thinking higher and should too end term? think those we targets? be you

Charlie Giancarlo

rest to year, confident fairly the guided so feeling we’re we’ve is what Well, the there. of

change ready guidance long-term our a early. on bit not to this We’re it’s too

get margins that in is alluded line, mix. to FlashBlade you with What You as such better new increase. you any sales as product see

put wouldn't going a I focus on So too strong mix forward.

gross increases that’s in is better are -- FlashBlade but improving. gross sales to it for that I a margin And course As lower today, -- normal we’ll get clear be product new products. margins the expect of events a

David Hatfield

you that position offered, where over terms give we the now Sherry And full in in lead are the are the in have for the obviously X.X the medium-term, of we that we working gross right is margin statement in this the terms for saw innovation very well. certainly of significant guidance raising NVMe, year cycle

we we see in like really So medium-term. what the


Your Huberty question comes Katy next from Morgan Stanley. from

Katy Huberty

You discussion the margins impressive growth you’ve about more margins and seen that even spend couple of a support lot product over in quarters. last of

margins… So would love there is subscription your on some continue growth or as revenue we’re won’t a scales, thoughts as support to why that that reason approaching

Charlie Giancarlo

is There line. Katy of lot a interference your on

answer and let going I'll start off I think an forward. then we you’re asking to continue Tim conclude. about op margin performance and with why might not that expect Again,

talked on XX as for has focus maintaining and quarter and in that or higher company And to our we long XX growth. percent to a get real vagaries terms pour maintain each aim. profitable our digits of really so is that’s as overall mid but single to rate on could We of that we’ve our growth, have on in the target -- range target the foot the gas the was about growth that our profitability to in as and growth are as So really past, was in the to the as company as we long of expense terms and forth going be the focus do growth. that hiring our on is gas then

Tim Riitters

bit static here. noise as of was And in there Katy our little apologies

margins they've you're think been absolutely also right. you're asking if last quarters, the very margins, nicely. over Support climbing question very, and I a support you about look several

great a think in. and doing by it's is kick starting as that really is the efficiency our world there fantastic scales, a just model they’re combination business then class evergreen I finally job. leverage inherent support effectiveness also to organizations the But And of in wonderful business.

support the and margin providing rates seeing well. now gross at as We’re scale renewal that really on that’s lift great nice side

about of if So a pieces you gross of excited things margin lot will. be to both


from comes Your Kurtz Capital from next Markets. KeyBanc question Alex

Alex Kurtz

the real forward, the that So -- just delivering segment you're in per tier anyone, margins at tier the and value are just be series. clarification there of with so X on there significant because that’s you’re could another difference Is base high-end maybe a X product Tim workloads. really value install structurally price of the also X, seeing providing is going much X your series. out more your higher there a because your than traditional products IOP

So maybe on cloud. is base? on of a then there install the top reset I have the end just follow-up a your And

Tim Riitters

on gross thought as Alex pool our margins, we’ve in in a business. portfolio a margins gross always the So about

we so value. say you as heard And Charlie earlier sell

part and this early really of X the seeing. and you putting adopters saw those X to what we’re to test we’re with so use quarter is And delighted what

margins to series, we’re and no draw that going. the And it’s conclusion and going wouldn’t with I so pool pool. going the X we’ve gross managed the different. keep manage and that always next going But

Charlie Giancarlo

and that's Pure, bringing have NVMe to think niche in with tried in democratization masses. just days believed general, to to what end drive earliest I back exactly believe segment the performance we never we high in we’ve of the the X,

on And is the XX% product -- so line. product to we consolidation think high bigger with the at achieving line look of opportunity drive our if you now, NVMe the far

Alex Kurtz

growth the of what’s cadence to the the at on business? of rates the look there you relative rest the the cloud, Just when year,

David Hatfield

march. the of we’re on that’s to continue think reflective to where going we progress XX%, have it Continued

Fortune of progress up three is three which of and saw focuses and buys of cloud the agencies, the north the XXX, largest nonpublic the segments in [GXK] Our nice and government now across market healthcare X,XXX the is XX% all the obviously key top at on we list, those.


from - comes question next Your Jaffray. Piper Andrew Nowinski

Andrew Nowinski

ELAs, larger if the So want first ask Storage started to I to Pure your willing global about offering one begin ELAs you Does yet? these larger strategic offer not, offering customers. to these to are of competitors And customers?

Tim Riitters

gone to something market included. of as point take about look business how the products, this we in and ELAs again everything is remember No all at at. be that software in is we’ve think past might our the time, But we scales a

our reasons of And not in other one now. so you’re right seeing that’s ELAs business the

Andrew Nowinski

I I that client your wants last And how run do ESX if against storage announcement they you the hybrid operating system enables then on ask in cloud want to saw same on Accelerate. a the But NetApp your at as about I platform guess just the strategy. premise? compete Amazon do

Matt Kixmoeller

model development I and IT, that. hybrid absolute we’ve supporting announcements in the a of initiatives think number we of and around made believe

and acquisition the cloud able today, And offering, we announced then CloudSnap be data look if able both which we hybrid across and we’re to acquisition that data us the integrate our to Accelerate on-prem a at excited that arrays allows the on-prem natively. cases to to cloud. unlocks at announced hybrid lot So you use our be send to about of federate


from comes Ittai question next Your Kidron Oppenheimer. from

Ittai Kidron

the is of to came Couple In way this to changes not enterprise main some you, they’re talked scale working questions the are for already of of us a to first market approach. they what think are very you're in you go to the look ahead Help for how Last of showing done. the much about company business, about that things of in you've still make reason and me still and to forward Charlie. hard you’ve lot to? what they call and me the showing, one way

Charlie Giancarlo

to forward. I say to say that to continue of a lot make came company would but wouldn’t the certainly changes help going to that I I I came scale

the I which the made, in programs, we we was to done cloud sure meant we’ve forward, how engineering, for a level all customers, as supply chain we such focus do focus to to that us to certainly the how as us really had going that enterprise to the good that for to you in that already channel opportunities, as bias large in that. enterprise what sales. changes business we year. area that to units business and of programs apparent we product and way the for we know, upscale main other a difference And greater that of and alignment terms outside marketing, certainly on a the make going just making embarked things such was perhaps terms what give less around greater of marketing this of And from address product align was was company extent structures, this are reorganized Some company's around and terms think for

future. or all at to say good for really going make edge the So refocusing difference already was bigger it I innovating would practices the us around around a company and was that just aligning in what that the were the the ones

Ittai Kidron

I versus with you you announced with do AI. also NetApp and do is this How compare them? around guess contrast Then relationship NetApp NVIDIA what Kix, I what and you them doing for

Matt Kixmoeller

just The in seeing point Number those and NVIDIA good we’re wins I’ll app the one, it from business continue to I feel think was flattery is and certainly with case it. to of growth a our see real in same we things. couple attention a and announcements. just about

at to initiatives big. our have I one. an then competitors that and out references And references the the scale is have would example. them. it they they out, our sure quickly day the we public of can that small AI of advantages array small, put to is to things And public one mostly You largest start line put don't is really advantage I’m with real product as secondly people steam get any as And you to our huge of look any flash buy start don’t is plate but an from grow say on in one

grows. a with initiative you start can as and plate grow You seamlessly flash small add


William next comes Your Ader Blair. from Jason question from

Jason Ader

for for one one Charlie. and Tim have I

the because than For you imply Tim, quarter? from gross confirm better series the a can seems it what’s that’s margin to X M margins series that has the this

Tim Riitters

our for are capture this we answer, value earlier call that reasons so Jason, short of it, X better yes. The in yes I customer margins on from us the think at for seeing terms value can we talked the the point, and are

Jason Ader

for cost a it is you? goods the standpoint, from same roughly And of

Tim Riitters

the we’ve that NAND. mean thought of there always some time see I to There and the early that around material indeed benefits year, because right the benefit components market we’re for in is starting call, start as Charlie bill alluded last relaxing happening. that’s we some seeing seen this on a we NAND tight

David Hatfield

other with in. can just flash to architecture, our is thing we direct The would run now program I add directly

buying finished gives SSDs advantage X with so an that to of us And course it. buying we’re and instead run-in of

Jason Ader

following the perhaps a it's But the as maybe then I just or really too up a think And guess Charlie. little job, you're for -- a can bit Maybe the strong. much company do go-to-market it’s and maybe business be where better geo, doing in of on vertical Ittai’s sales looks a thread, obviously you terms side?

Charlie Giancarlo

any company, I would into as it an Coming view antique car.

away but You’re requires wonderful time constant from every or And going something or tuning. always only driving like you’re road, company the miles break alternator a down a that. pad this the having

in there are things can sure want of better quarter, we to that we make particular So any those. we’re well do and aware

so - specific to areas. journey to very go know we is And to address But don’t as are you can clear. what there company be still instrument started more our so rapidly and having there There's very focusing do important, are lot a into to that we that to be that that’s useful where challenges is a up try to it’s its work market. I transparent them here. very more clear,

fill We’re that and past number as that on announcing technical line, And and there we’ve today. continue we’re story, which continue said our our acquisition bringing we there. there, is cloud do as to to we we of out more. more go There as build well have out of the excited our we can capabilities areas, the still technology about product team both and more plan to and a in features we

how we will -- focus we’re are room these and to of areas, as we where going So on that for business about continue improve lots of the improvement how proud forward. but these very optimistic


next from Erik Securities. comes Your JMP question from Suppiger

Erik Suppiger

that’s A you some that place actually opportunities? of you times of type assume channel I little you’ve taking competitors has your as up a business business taking talk what referenced of of couple partners what some your direct. some that's with bit Can happened EMC. opened see and about

David Hatfield

I wouldn’t trend it's think one into it I multiple. isolate that vendor specific across seeing we’re a

advantage extended our XX to hard points even order we’ve I product lead differentiated got of margin and it’s gross that. XX that a we compete with further, think just to line

the win. so think And competing with in expansion measured whatever can in of terms success they win is rates. our they're do trying the margin them and do And to gross I the to of

many of see of we leaving partners lot culture And so, Dell, those ours. of are it, I think of EMC, a leaving them of to has folks changed the

been deep So quite they’ve domain they’ve bit. got knowledge a deep and biased

so receptive they them they’re the they to that can seems servers embrace and coming there see more they trend and the on also on So with over will with go we with top versus me storage. is focused it And here. get get line focusing servers, much there

half the a it’s landscape confident general and we’re second uniqueness that think competitive year. in I the So benefits of our very

Erik Suppiger

might the Do -- some you out you think Then FlashBlade last in ’XX? fiscal start maybe future, foreseeable breaking in question.

Charlie Giancarlo

past, tend is lumpy learning especially products, a that to individual think the I've breaking and out as new said in really, a curves, strong that be to individual can products way followed. go our that. I quarter, We line for through distract from basis items quarter out reported on tend But this about future. pleased near FlashBlade we’re -- in did from don’t were anytime breaking it good the see I the so have

David Hatfield

Eric just to you thing on as follow-up one the partner mentioned well.

And And out in programs partner rolled -- the rewarding partners us. really been new we partners so received. that that the well we’re national those have invest

more they’re that. to from so And relationship in and financially they’re us, investing driving reciprocal leads they benefit there's that practices

it’s the going are And at players. national while little as area dynamic to we’re me us bit us think and that that’s others a channel benefiting largest So continue appears to to from from the the pulling least an is away invest. I to


Your next question from James. comes from Raymond Simon Leopold

Victor Chiu

as AI. when extravagance was help I Simon. of a lot a rest hoping a is center, the make and the longer-term of hardware hard where for compute obviously is ahead flash the of into Data economically. when flash storage us performance applications case like far in the disk at how the back to Obviously, look that’s to we parts so the specifically Chiu for an considered point of it situations can bottleneck of evolved, and it opportunities historically was the Big legacy more dig was Victor flash is Because advanced data you it has deeper time of in newer in role because This the shifted and was is there the standard. little

current solutions bottlenecks at are of here? and the the GPUs So analogous in as other the current do like we’re my become think should needs, in early specialized this platforms FlashBlade? we progression advancements respect? given and what versus specialized the is, ever point more And stages And that guess to flash enough question they silicons meet I about still sufficient being

Matt Kixmoeller

expansion I sides both think we’re excited about spectrum. the on of

final the motion layer ultimately StorReduce price the So of storage from you after end cost the landed as sell going , more cheaper before. as look at is demand as conserve renaissance only terabytes flash to disk in storage the or acquisition you higher thing and is performance noted helping top that that about of leveraging some those would been forward prem. that’s even as then on the with and GPUs and on of a might the us And after opposed performance on can think And of even modernizing declines, only we so have option so that us that creating NVMe AI go tape cost disk the center and by then well NAND offerings. the data and we

so think opportunities modernize in to time we good And we’re high both directions. and seeing it’s everything


comes Your Mehdi next from SIG. from Hosseini question

Mehdi Hosseini

Most question. my been follow-ups. I of good asked, questions have couple already taking for the Thanks have of

independent interesting, your running Do feature of follow-ups. try this Looking at oriented and into acquisition products? products? you years you for and a embedded up. embedded this acquisition, Or two especially it scale is very I to the And flash a your object as going becoming be few intriguing follow tonight FlashBlade acquisition into to before very your announced dedupe have see the is

Charlie Giancarlo

maintain so is software be and mean independent to immediate customers. we -- plan do several -- the answer not on what to for to customers the clear hardware. to to I you new running think add And is next standard our that by sell but yes. continue maintain to at months support So a their We plan though,

more we that are with exact large you call might year. that overall management, about software program our talk make product half in expect, the latter -- product going folds-into on the this able the of the we'll our customers how towards that. announcements it compatible line We’ll what sure environment. exactly and is it this While reliability our the that describe be And the to make purify the are of has to that it new availability

have in our might the we both as the As mentioned, Tim as are current well -- incorporated expenses revenue guidance.

So don't we a see it being major…

Tim Riitters

the for And guide anticipate Nothing for acquisition. of the now right we to year, is into in rest any side, this baked the revenue don't on that the be dollars Mehdi clear guide.

Mehdi Hosseini

to And one When follow-up be supported NVMe over solution fiber on fabric channel? you by expect NVMe. do

David Hatfield

we most on when as the I focused channel on end biggest to transaction aware, the follow on start where side NVMe that’s -- we opportunity, our first look the first. side. that that’s systems fiber to think that latency would fabric where we stated be NVMe actually bringing promised be the occurs, in opportunity out at by we’ve year. so we this a publicly, storage the IP our you’re then implemented So over We goal of as of is the And saw and within

we expect channel And on year. next are our year we of track fiber and side deployment this the with absolutely so IP


Hall Goldman Sachs. question Rod comes from from next Your

Unidentified Analyst

of FlashArray, win on quarter-on-quarter. you have increased have that questions, said rates I couple

NVMe helping there? then Just by is And or else driven got solely in it FlashArray, a wondering I’ve that’s anything follow-up.

David Hatfield

in overall extended to really that. our the product differentiation a doubt The There’s on I FlashArray//X cycle no big effect is mote think that having biggest contributing business. our is

Unidentified Analyst

against or seeing win geography Any you’re that competitor better particular rates? any

David Hatfield

consistently them and across seen that board years hasn't for changed. the We’ve

largest internationally on driving segments the markets think to that focus we’ve continue I and So our in largest the got. success we’ll

we helps that the grows, and the thrilled with see as it in largest overall we a Americas top our when particularly quarter really business So strong did in well. obviously were being line QX, it which

Unidentified Analyst

in question, larger what more are would trends be that mentioned business? deals you last that FlashBlade Thanks. further seeing seeing you’re One You kind on helpful. Any of color frequently.

David Hatfield

part say underneath hit just would I follow-up and the Kix I'll maybe first it. --

in the We’re analytics in the the restore AI. seeing and next and use great in one traction is third rapid one data] one use real cases, backup three generation other is [and replacements and is case

it’s competitive in talked success great the area. of And very so the we’re all aware one New We about segments. and seeing are traction installs repeatable Genome of Center, and that three of this York those we’re across largest

about globally. and also with is We win the great us RBC largest of one banks talked this for a

SaaS a bunch public companies so that whole And sector. healthcare, there’s large we other and of had successes across

those seeing across cases we’re segments. across adoption three So great use


comes next Eric Street. from question Your from Martinuzzi Lake

Eric Martinuzzi

cost want maybe broadening if you’re have were this about that Or your to current StorReduce, A so bids? in this is question did just you this competitive a some base not regarding hybrid to wondering more you lacking you offering them -- so they when find is the that maybe something capability? having the product and really with there portfolio, capability install

David Hatfield

Look, things. couple a I’d say of

petabytes times this here, when hundreds out and of flash a data. First customers sense. today meet is in and that fit isn’t natural Data, off, we Big of the petabytes in hundreds bringing have in don’t around probably often flash stick plates have of equation And But we realistic. go dedupe to they broader

discussion get flash, we we data. about petabyte for tier need often the of rest lower them their to some we so to how but the tens move with can And of

of should And cloud. rest we data the the think the so be in

have previous storage. ago future is cost you and the if and a decade might so used look flavors customers three think cloud at flash And public a low from of disk tape, we workflow

Eric Martinuzzi

far about on getting as the capability? But you the side. for the partner integration education, what got as on some the timeline I understand this And to technology smart do partner

David Hatfield

work with engineer technology to partner it all of and drive our all that full stuff. partners we we talked the a once integrations normal we the as about, launch So do be purify as we’ll train product product any, will tier

Charlie Giancarlo

the like do be And able got to time that. we to feel we’ve

the about confident in we that. for place feel we So timelines have

David Hatfield

and partnership extend those And embrace to perhaps new we of intend successful it’s also well cloud as to useful in was number a StorReduce that areas. and brings this strength mention created product also and partnerships. partnerships


Fox Our last question from comes from Cross Stephen Research.

Stephen Fox

focus expense then whether also gross talk scale be up. I to seems the as on just the leverage, about your centric It success wins. Just a you leverage some channel well Can the larger and having? in as going creating leverage. further And operating follow for have quick you’re very given forward the margin ramp-up expectations changed had OpEx

Tim Riitters

suggesting No, to there our leverage there you’re in just issued guidance I I year that be profit that point raising would But is here right we full to the think had. up. today,

having. view our and the to been But is So the go-to-market business dynamics the don’t build, very inherent there leverage I performing and it’s the is business in we've healthy. well think changed and success long-term of

Charlie Giancarlo

investments lot a take add, that upfront come through. just the make of we some I’d to And time

so doubling And that seeing we’re candidly we’re down. and the of some of benefits

in think in invest are market us invest market in I capacity. we the in and awareness invest partnerships, additional competitors our half to as feel in going our channel second the

one's motivated excited for Kevin really about and So second the we're And half. you, EFT. this

Stephen Fox

necessarily Tim cash on investments line? year out your about free And now. flows think full cash specific free think for year. full roughly operations, cash flow you been from as for just that, year do is the about on about quick the the you’ve cash flow that Where What say flow not come now guidance we the but real you for the

Tim Riitters

that. flow, never in has cash mean, anything standing really boundary guided or can Steve, with I do just individual cash quarter be it we’ve to free noisy. collections it like

number is a than more free this year predictable given we've generation a qualitatively any year but being which really point on much FCF a flow people to positive last quarter amount. I FCF. done We all year think the our we stable book said and operating cash were of year stable margin, is progress definitely the small for anticipate stronger


call closing remarks. to I Charlie will over now the for Giancarlo turn

Charlie Giancarlo

team Thank want I and their lastly partners their Everyone, empowering the quarter Pure like to of proud for efforts we’re Puretans on And again family. of team their our really tireless the we’re global once next behalf Pure this this technology you, to customers exciting again, StorReduce the all I’d proud impact the on to our the to you entire a partners progress call Mike. our major succeed. Storage generation to globally, an to and want has come. make today. customers a thank of cloud weeks that team StorReduce to you with architectures. dedication. We and welcome believe and I built us along incredibly And chatting the thank storage the days has that with and on to opportunity been and talking to all I you It’s for look pleasure joining forward of in


This concludes today's conference call.

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